Service providers: obligations under CC(ICAC) Regulations

About this series of articles

This article is the eleventh in a series about the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, often abbreviated to CC (ICAC). The series explains the law, and how to apply it to your business so that you remain compliant.

By service provider we mean a business providing a business to consumer (B2C) service: whether a tradesman, a lawyer or any type of consultant. The definition also includes all services provided from a website.

Your customers’ right to cancel

Under the Regulations, your client or customer has the right to cancel the contract within the cancellation period of 14 days from the moment the contract has been made. He can exercise this right just by informing you that he wishes to do so.

The implication is that you could face the risk of your client cancelling a contract after you have started work if you start within 14 days of the contract date. Moreover, if you have not yet delivered some or all of that work, you cannot charge your customer for it.

You can avoid the risk of cancellation if your client instructs you to supply your service as soon as possible. This instruction is valid only if you also tell him that he will lose his cancellation right if he does so instruct you.

So, to avoid the risk of cancellation once work has started, you should decide whether any of the following are possible:

your business model is such that most of your clients will explicitly ask you to start work immediately (foregoing their right to cancel)

you can delay starting work until the cancellation period is over

you can set out your terms and conditions in such a way that a contract is formed conditional to you performing a certain action (i.e. so that you can control when the contract is made)

This creates a whole process with which you must comply. You can read more here.

How to comply

If your service is not capable of being fully performed within the 14 day cancellation period, you can mitigate the risk of cancellation and refunds only by structuring the process so as to get the consumer’s consent to start the work within the cancellation period, and to notify him that he will still be liable to reasonable costs in the event that he cancels the order.

You would then be entitled to charge the customer or client for the period for which the services had been enjoyed – calculated in proportion with the overall length of the charging period.

For a type of service which you cannot complete within the cancellation period, (like a wedding planner), or if you simply chose to operate by waiting for 14 days before you start work, then you would need to:

Provide information on cancellation rights, including the model cancellation form

Allow a 14 day refund period (14 days from the day after the contract is entered into)

Where goods and services are bundled together (e.g. an internet or phone service and hardware), you will need to comply with the information regulations and cancellation rules for both types of product

Are you exempt?

The information you need to provide to a client

You should understand and provide all of the items of specified pre-contract information. You do not have to provide the information in one place or at one time, but it must be provided before the contract is made.

There are two points here.

First, you will probably find it easier to manage the Regulations if you minimise the number of places where you provide critical information. If you provide it in many different places it will be harder to keep track of on-going accuracy.

Secondly, the Regulations specifically say that information has been provided to a consumer “only if the consumer can reasonably be expected to know how to access it.” So small print on a page is out.

We suggest that product-related information should be in one place - usually the single page full description of each product. All other information can probably also be on one page or to some extent as part of your terms and conditions or other contract document.

Some of the information points are unspecific, so it is left to you to interpret them in relation to your business. This law is enforced by local trading standards departments, so enforcement will vary both as to strategy and practice.

Further information

Unless you are exempt from the Regulations or are already compliant, you are likely to need to update your customer contract templates. These are likely to include your website T&C if you sell online and your offline customer contract if you sell offline.

If you have any questions about the Consumer Contract Regulations 2013, or would like help updating your contracts to comply, please ask us. We’d be delighted to help.

Please note that the information provided on this page:

Does not provide a complete or authoritative statement of the law;

Does not constitute legal advice by Net Lawman;

Does not create a contractual relationship;

Does not form part of any other advice, whether paid or free.

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